Respondent's application under s75 (1) the Victorian Civil and Administrative Tribunal Act 1998 (Vic)

Nicolouleas v MSC Cruises (Australia) Pty Ltd (Civil Claims) [2016] VCAT 359

1. The Respondent's application under s75 (1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) is dismissed.

1. The Compulsory Conference set down for 7 March 2016 is cancelled.

1. By 15 April 2016 the Applicants may apply to join Flight Centre Travel Group Limited ACN 003 377 188 as Second Respondent. In order to make such an application, the Applicants must file an ASIC search of Flight Centre Travel Group Limited which shows that company's registered office, and a document entitled "Points of Claim" which sets out the allegations of fact and law upon which the Applicants seek to rely against that company.

1. The principal registrar is directed to list proceedings C6203/2015 and C6205/2015 for hearing together on a date to be fixed.

1. All parties (including, if joined as Second Respondent, Flight Centre Travel Group Limited) have liberty to apply.

1. The Tribunal notes that when proceedings C6203/2015 and C6205/2015 are determined, the two sums of $398.20 must be taken into account.

1. The Applicants in proceedings C6203/2015 and C6205/2015 are members of the same family, Mary and Socrates being the parents of Argiroula.

1. The Applicants' claims in both proceedings are essentially identical. They went on a cruise in Europe, on the ship "MSC Sinfonia", which they found to be unsatisfactory. They had purchased the cruise from a travel agent called "Cruiseabout Knox City", situated in the Knox City Shopping Centre. An examination of documents reveals that that travel agent is a business unit of Flight Centre Travel Group Limited ACN 003 377 188.

1. As described to me in the s75 hearing today, the Applicants say that the ship suffered major engine failure on the cruise, which led it to bypass two very important ports of call on the cruise. The Applicants were not able to visit Crete, and their visit to Turkey was reduced from two days to one and the Grand Bazaar, which was a major attraction for the Applicants, was closed on the one day that the ship did stay in Turkey.

1. The Applicants have sued MCS, the Australian entity which is part of the group of companies that conduct the cruise, for compensation. Mary and Socrates sued for $6,573.00, which they say was the total cost to them including airfares to and from Australia, and Argiroula sues for $3,737.60 on the same basis.

1. MCS applied for orders summarily dismissing both proceedings under s75 (1) of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) on the basis that the Applicants had signed "releases" and received agreed compensation before issuing their proceedings. MCS's argument appears strong at first instance, but the Applicants raise several points.

1. s75(1) of the Victorian Civil and Administrative Tribunal Act 1998 is as follows:

At any time, the Tribunal may make an order summarily dismissing or striking out all, or any part, of a proceeding that, in its opinion -

(a) is frivolous, vexatious, misconceived or lacking in substance; or

1. Case law makes it clear that it is a very serious matter for the Tribunal to dismiss a proceeding summarily and thus to deprive an applicant of their ordinary right to ventilate their claim, call their evidence and argue their case at a full hearing of the proceeding. The Tribunal is obliged to act with great caution before doing so, and should not exercise that drastic power of summary dismissal unless it is quite clear that the applicant's claim is absolutely hopeless, unsustainable in fact or in law and bound to fail. See, in particular, Forrester v AIMS Corporation [2004] VSC 506; (2004) 22 VAR 97, a decision of Kaye J. of the Supreme Court of Victoria, which confirmed that the principles expressed by the Court of Appeal in State Electricity Commission of Victoria v Rabel [1998] 1 VR 102 apply to summary dismissal applications to VCAT brought under section 75.

1. "Absolutely hopeless, unsustainable in fact or in law and bound to fail" show that a respondent seeking to have a proceeding summarily dismissed faces a substantial burden. The applicant is entitled to the benefit of any doubt.

1. The "releases" signed by the Applicants are each contained in a circular letter[1] dated 14 December 2014. The letters commence with an offer, and then set out the operative part. Omitting irrelevant words, the letters are as follows:

We do regret the inconveniences occurred during the cruise and, as a gesture of concern, we would like to offer you the 40% refund of the cruise fare paid to MSC as well as a special 20% reduction on your next cruise with MSC. Please be so kind as to fill in and sign the form below and show it to your travel agent.

I the undersigned [Applicant] ... accept on my behalf and on behalf of every person in my cabin, the 40% refund of the cruise fare paid to MSC and a 20% discount per cabin to be applied to my next reservation with MSC. The discount is valid for cruises sailing up to December 2016 it is based on a cruise only fare, it is not valid at peak holiday times (etc) ... Upon acceptance of this discount, I the undersigned release MSC CROCIERE SA and/or its agents and/or its shipowners and/or its master and/or its crew members of MSC Sinfonia and/or any other party in relation to the above matter from any obligations and I will waive the right to start or continue any legal action against MSC CROCIERE SA and/or any other of the above mentioned parties.

1. If I pause for a moment, I note that the part of the letter which contained MSC's offer clearly identified the offered refund as being "40% of the cruise fare paid to MSC", and that the "release" part also used the words "40% refund of the cruise fare paid to MSC".

1. All of the Applicants signed such a release on 8 May 2015. The VCAT proceedings were issued on 25 January 2016. The Applicants confirm having received the sum of $359.20 in the case of Argiroula, and $359.20 jointly in the case of Mary and Socrates.

1. Mary and Socrates confirm that $359.20 is arithmetically 40% of the cruise fare paid by them to MSC.

1. Argiroula does not accept that $359.20 is arithmetically 40% of the cruise fare that she paid. There is some uncertainty in this regard, because all of the Applicants paid the travel agent rather than MSC directly and MSC points out that the travel agent packaged together different services into a "package deal holiday" whereas MSC only supplied the cruise component. $359.20 is 40% of $898.00. Argiroula says she paid more than $898.00 for the cruise fare but on the information that the parties produced in the s75 hearing, it is possible that the amount she paid included such things as railway transfers and port fees. It is fairly clear that if $359.20 is not exactly 40% of the cruise fare that she paid, it is only deficient by a few dollars. In any event, on the information available in the s75 hearing it is possible that MSC has not paid her the agreed sum under the release, making it arguable that she has not released MSC from the claim and that she is entitled to bring this VCAT proceeding.

1. The party who brings the application has the onus of producing relevant documents to the Tribunal at the hearing of their application. MSC asserted that it had paid the settlement sums under the "releases"; Argiroula questioned that assertion without producing any documents to verify the basis of her professed doubt; and MSC did not produce any documents which verified that Argiroula had paid $898.00 for the cruise fare. It is an unsatisfactory situation but I must conclude that MSC has not proven its assertion that it has paid the settlement sum to Argiroula. On the other hand, Mary and Socrates concede that MSC has paid the settlement sum due to them, so this is not an issue in proceedings C6203/2015.

1. The Applicants say that MSC's letter of 14 December 2014 was not the first communication of an offer, but came after offers had been made by MSC CROCIERE SA on the ship to the effect that guests were offered a refund of 40% of their entire expenditure on the cruise. That is, a European who got onto the ship in their hometown might receive 40% of the cruise fare paid but an Australian would receive 40% of their airfares plus the cruise fare paid. The Applicants say that this coloured their interpretation of MSC's letter of 14 December 2014. As the airfares are such a large component of the overall cost of the cruise, the Applicants say that they would never have accepted an offer which ignored those airfares[2].

1. Further, the Applicants say that the payment was also to be of 40% of port fees. They produced a letter in the s75 hearing which was on a letterhead saying "MSC", apparently in the sense of a brand name or trademark because it does not contain an address or anything identifying it as a legal entity such as an Australian Company number or the European designation "SA". That letter, dated 16 December 2014 and addressed to "Dear Guest" said in typed text

With reference to our previous letter dated 12.12.2014[3], we are glad to confirm that you will receive the 40% refund of the cruise fare paid to MSC and, as a gesture of goodwill, the 20% discount will be combinable with any promo available at the time of your next reservation.

1. There was a space for that letter to be signed, in that in typed text it said "Yours faithfully, [space] MSC Cruises". Instead of a signature, there are words in handwriting "including port taxes" over which has been placed a rubber stamp of "Newco Sinfonia Panama" which I take to be an entity within the MSC CROCIERE SA "group" of companies.

1. Those words "including port taxes" are relied on by the Applicants to argue that the $359.20 paid was inadequate, because the port taxes would have been additional to the cruise fare. In the s75 hearing none of the parties could identify what the port taxes were, but I think it is fair to say that all of the parties suggested they were not great. To add to the confusion, Mr Stoitsis submitted for MSC that the cruise fare paid by an MSC customer included the port taxes. That is, if a customer paid $1,000.00, port taxes would be paid by MSC out of that sum, and the customer would not pay $1.000.00 plus the port taxes. Thus, argued Mr Stoitsis, the hand written words "including port taxes" did not assist the Applicants because they mean that "the cruise fare paid to MSC (of $898.00) included port fees", so that 40% equalled $359.20. It did not have the opposite meaning, that the 40% was to be applied to $898.00 plus port fees.

1. Once again, the parties did not bring documents relevant to this issue.

1. The Applicants said that they had always interpreted MSC's offer to be of 40% of their airfares plus the cruise fare paid, and that they signed the releases on that basis. They say that after they sent the signed releases to Ms Tara Stewart of Cruiseabout Knox City, on 15 June 2015 she revealed that the refund would only be of the cruise fare component. The Applicants note that MSC's letter of 14 December 2014 called upon them to show the release to the travel agent, which is why they had sent the releases to Ms Stewart. The Applicants produced two emails of Ms Stewart. As they were sent to Argiroula the references to "Mum" are to Mary:

My apologies, I have just been told that the refund was the total for the three of you. I am just awaiting the breakdown as to how much was for you and how much was for your Mum.

I have cancelled your Mum's refund for now until I have this info.

It has been confirmed to me that you were to receive a refund of 40% of the cruise portion paid (excluding taxes and port charges).

Both yourself and your parents paid $898.00 cruise fare, which equates to the refund of $359.20 per cabin.

I'll arrange this to be refunded to both yours and your Parents bank accounts.

1. The email of 16 June 2015, saying "excluding taxes and port charges", appears to be at odds with the handwritten words in MSC's letter of 14 December 2014 "including port taxes", although as I said above Mr Stoitsis argues that because MSC bears the port taxes they are "included" in the $898.00 and therefore 40% of them is included in the refund, so that the Applicants are not prejudiced by the word "excluding".

1. The Applicants say that after receiving Tara Stewart's emails of 15 and 16 June 2015 they specifically told her that they had rejected MSC's offer and that she was not to pass on the "releases" to MSC, and that Tara Stewart agreed that she would not pass them on and that she said words to the effect, "okay, the release is cancelled".

1. Tara Stewart was not called as a witness in the s75 applications, and nor was any witness statement or the like produced in respect of her evidence.

1. Whilst the Applicants concede having received two sums of $359.20 from MSC, they say that they were unaware of this until just last Friday because the payments were made by EFT into bank accounts which they rarely check. As such, once Tara Stewart said that the releases had been cancelled they felt perfectly entitled to issue the VCAT applications. It also follows from this that their claims of $6,573.00 and $3,737.60 do not take into account their receipts of $359.20.

1. It is regrettable that the parties were not properly prepared for the s75 hearing.

1. The Applicants' opposition to the section 75 applications were not based solely on the proposition that the payments of $359.20 was not arithmetically correct, so that they had not received the settlement sums.

1. They say in substance that Cruiseabout Knox City was the agent of MSC, because MSC's letter of 12 December 2014 required them to show the release to Cruiseabout Knox City, and that when Tara Stewart told them that she would not pass the releases on to MSC and that they had been cancelled, that statement bound MSC and resulted in there being no settlement and no release.

1. The Applicants must of course refund the payments of $359.20 to MSC, but they say that they did not "accept" those payments because they were not even aware they had been made.

1. It is apparent that if MSC is able to successfully defend the proceeding on the basis that the Applicants have given and are bound by the releases, the Applicants may have a claim against Flight Centre Travel Group Ltd for misleading and deceptive conduct in contravention of s18 of the Australian Consumer Law. The Applicants would say that Tara Stewart's representations in June 2015 that she would not pass the releases on and that they had been cancelled were relied upon by the Applicants to their detriment, in that the Applicants issued the VCAT proceedings unaware that there was any basis on which MSC might bring a s75 application. Clearly if the Applicants were to proceed against Flight Centre Travel Group Ltd they would need to articulate their claim properly and apply to join it as a party to the proceedings.

1. In a s75 application, the parties' assertion of conflicting versions of the facts does not warrant the granting of the application. In fact it demonstrates that those conflicting versions of the facts must be considered at a "trial". A s75 application cannot be determined on the basis, for example, of the Tribunal opining that MSC appears to have paid the settlement sum under the releases, and that the Applicants' argument that MSC short paid because it did not take into account port fees appears unlikely. Nor can it be determined on the basis that the Applicants are claiming 100% of their entire expenditure on their holiday, including airfares, when even they say that the mechanical problems with the ship caused them to lose 2 days of visits to 2 ports rather than their whole cruise.

1. In opposing MSC's section 75 applications the Applicants alleged that the "releases" had been "cancelled". As such they are not claiming the "balance of the 40%" under a settlement agreement - they are claiming 100% of their entire expenditure on their holiday, including airfares.

1. In the circumstances I will make orders which dismiss MSC's applications to summarily dismiss the two proceedings, and to set out a reasonable time within which the Applicants may apply to join Flight Centre Travel Group Ltd as a Respondent.

[1]Addressed to "Dear Guest" and requiring the guest to fill in their name, address, date of birth, cabin number and itinerary of the cruise.

[2]The concession by Mary and Socrates that MSC had paid 40% of $898.00 did not go so far as to be a concession that it was the right amount of money. They too asserted that MSC's oral offer, purportedly confirmed in MSC's letter of 14 December 2014, was that the settlement payment was to include 40% of their airfares

[3]The parties did not produce that previous letter